The award raised little protest in Syria, which is enmeshed in a bitter and protracted civil war. But, as Conal Urquhart discovers, Tel Aviv's decision may have far-reaching consequences

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The Golan Heights is dotted with the remains of war. Its slopes are covered with mine fields and the rusted hulks of armoured vehicles. The security forces that police it remain on high alert as the Syrian civil war threatens to infiltrate Israeli-controlled territory.

Forty miles away in Damascus, president Bashar al-Assad is fighting an insurgency thatthreatens to overrun his capital. He is rarely seen and his hold on power appears precarious.

When Israel announced in February it had granted an oil exploration licence to US firm Genie Oil and Gas to drill in the Golan, which Israel has occupied since 1967, Assad said nothing, his government protested weakly and no other country spoke out in Syria's defence.

Genie will be the first company to explore the Golan. But it is starting its campaign at a time when the Golan is facing levels of violence not seen since the 1973 Yom Kippur War and Israel, for the first time in its 65-year history, is contemplating an abundance of domestic natural gas supplies.

A spokesman for Genie said: "We are planning a comprehensive exploration programme over the next 36 months including geophysical test and exploration wells to validate our play concept, pursuant to the terms of our exploratory licence. "Based on our careful review and analysis of the available evidence - some of it gathered from wells dug in the region over 30 years ago - we believe that our licence area may contain significant amounts of oil and gas in relatively tight formations."

Until 1967, the Golan was part of Syria. Israel took control of it after the Six Day War, but almost immediately offered to return it to Syria in return for a peace agreement. Syria refused to negotiate with Israel and launched an attack on the Golan in 1973. After initial advances, the Syrians retreated.

In the subsequent armstice deal, Israel gave up 5% of the Golan to Syria, an area that today is patrolled by the United Nations Disengagement Observer Force (Undof). Until recent months, the border has remained peaceful.

Unlike the West Bank or Gaza Strip, there has been relatively little tension between the Syrian population and Israeli settlers. The Golan is strategically and economically useful to Israel, providing the country with 15% of its water supplies. However, it does not hold great significance in the history of Judaism. All recent Israeli prime ministers have indicated a willingness to return the Golan as part of a peace deal with Syria.

The first difficulty in drilling in the Golan is legal. Omar Dajani, a professor of law at the University of the Pacific's McGeorge School of Law said that exploitation of the Golan's resources would be illegal under international law.

"As the occupying power in the Golan Heights, Israel is required by humanitarian law to administer the territory in accordance with the 'usufruct rule' under which Israel must behave like a kind of trustee, managing its resources for the benefit of the location population and refraining from depleting them for its own private interests. Israel's decision to grant a license to drill in the Golan flouts both of these obligations, though it is consistent with its past practice in the occupied Palestinian territory,"Â he said.

Peace negotiations between Israel and Syria, last mooted in 2008, are now unlikely. Since 2010, Assad's rule has been threatened - first by protests and then by insurrection. Assad's weakness has made the Golan vulnerable again.

Syrian government forces have retreated from the border areas to fight more pressing battles elsewhere, leaving a vacuum which has been filled by the Free Syrian Army and other anti-government militia.

Some of those groups have harassed the international peacekeepers that make up Undof and fired across the border. Two Austrian troops were shot in November. And in March, 21 Filippino soldiers were held hostage. Japan and Croatia have withdrawn their troops and other countries may follow.

The UN has reduced patrols and in the absence of a partner on the Syrian side may find it impossible to continue its mission. Undof's departure will bring Israeli troops and Syrian militias, including those affiliated with al-Qaeda, in close proximity for the first time.

In April Benny Gantz, the Israeli chief of general staff for the Israeli Defense Forces said: "For now they are fighting Assad. Guess what? We're next in line."

The decision to explore for oil in the Golan could accelerate that process, according to Fawaz Gerges, the director of the Middle East Centre at the London School of Economics. "Israel's decision will have serious repercussions on the armed conflict raging in Syria. Both camps will respond very vigorously and the opposition will feel obliged to outbid the regime's reaction," he said.

"The Syrian government and the opposition will most likely call on the UN and the Security Council to condemn Israel's action. I would not be surprised if one of the radical armed groups fires a rocket or two across the occupied Golan to register its opposition."

The reduced role of Undof and the Syrian government army in the Golan could allow small rebel groups to pursue their own agenda of antagoinising Israel. Shells have already been fired across the border, and some warn more serious action could be taken such as a cross-border raid to kidnap or kill Israeli soldiers like the attack that triggered the 2006 Second Lebanon War.

Pessimism on the Syrian frontier is balanced by economic optimism elsewhere in Israel. In March, Israeli businessmen and politicians hailed a new era of energy independence for Israel as the first flows of gas from the Tamar field came ashore after four years of development.

In three years time, if all goes according to plan, gas from the Leviathan gasfield will come on stream, which will give Israel enough fuel to become a major exporter.

In 2010, Lebanon said that the offshore Tamar and Leviathan fields were outside its maritime borders, removing a possible source of tension.

The prospect of an abundance of natural gas is already affecting the Israeli economy. In April, the Israeli central bank bought dollars to offset the appreciation of the shekel, partly caused by confidence in Israel's energy future.

The Tamar field, 50 miles west of Haifa, has reserves of around 10 trillion cubic feet (cf). And the Leviathan field, which is being developed, is estimated to have 16 trillion cf at the same depth as Tamar (4,900 metres) and a further 9 trillion cf and 600m barrels of oil at a depth of 7,200 metres. US independent Noble Energy operates both fields.

Most of Tamar's reserves have been contracted away to supply domestic consumers. But Russia's Gazprom is in discussions with Noble, its partners at the project and the Israeli government to develop a liquefied natural gas plant to export gas from the Leviathan field. Possible development options include a floating LNG vessel, an onshore plant in Israel or a pipeline to Cyprus where the gas could be liquefied and exported.

While much of the focus has been on Israel's offshore discoveries, the quest for onshore oil and gas deposits continues.

A Genie subsidiary, Israel Energy Initiatives, is setting up a pilot project to produce from oil shale in 2017 in the Shfela region of central Israel, the site of the biblical battle between David and Goliath.

Genie estimates the Shfela oil shale could hold in-place reserves of 40bn barrels of oil equivalent, but is encountering significant opposition from residents and environmentalists.

Shfela is in the heart of Israel, 20 km from Jerusalem and 40 km from Tel Aviv. Genie's sites in the Golan are on the periphery of Israel, 215 km from Tel Aviv. It is this distance which partly explains the desire to drill for oil in the Golan in spite of the tensions it might awake.

Yaron Ezrahi, professor of politics at the Hebrew University in Jerusalem said that the reason for drilling in the Golan is more ideological than economic."This is mostly an Israeli ploy to deepen its commitment to the occupied Golan Heights. It's part of the right's political programme," he said.

The timing is also no accident. It "is directly related to the fact that the Syrian government is not free to deal with this problem and that the Syrian army cannot pose a threat to Israel right now," said Ezrahi, "If Israelis find oil, I assume there will be a greater degree of aggression on the part of the Syrians to restore their sovereignty over the Golan."

Many of the characters involved with the Golan deal are associated with the right-wing of Israeli or US politics.

Genie was founded by Howard Jonas, who also founded the telecoms company, IDT. Jonas tried to emigrate to Israel in 2005 but found it impossible to manage his business from there. IDT is one of the largest private employers in Jerusalem, which Jonas has called the "centre of the world".

The chairman of Genie's Israeli subsidiary is Effie Eitam, a former leader of the Israeli National Religious Party, which represents Israeli settlers, and former minister for infrastructure. Eitam fought in the Golan and lives in one of its settlements.

Uzi Landau, the minister of infrastructure until last month, who granted the licence to explore for oil to Genie was a cabinet colleague of Eitam in at least two Israeli governments.

The Genie spokesman said the company was aware of the risks entailed in working in the Golan. "We have consulted with counsel on US, Israeli and international law, and are fulfilling our legal obligations. Having said that, we recognise that working in the Golan poses unique risks as well as opportunities and we plan on being respectful of those special considerations."